The new Aspen Skiing Co.-KSL Capital Partners alliance is buying the Eastern Sierra’s Mammoth Mountain, June Mountain, Snow Summit and Bear Mountain, giving the nascent partnership more than 6,000 acres of southern California ski terrain across four resorts that host more than 2 million visits a year. No price was announced, but in 2005 the resort traded hands for $365 million.
Rusty Gregory, the longtime manager and chief executive of Mammoth Resorts, in a statement called the move “the next logical chapter in the story of Mammoth.”
“This new platform, built around a collective passion for the mountains and our commitment to the people who visit, work and live there, is exactly what the ski resort business needs,” Gregory said.
Dropping a mere two days after Aspen Skiing and Denver private equity firm KSL Capital Partners announced they were partnering on a $1.5 billion deal for Intrawest Resort Holdings‘ six ski areas — including Winter Park and Steamboat — Wednesday’s news is nothing short of a shot across the bow of industry giant Vail Resorts.
It was no secret that Vail chief Rob Katz had long pined for Mammoth, with its drive-up proximity to southern California’s more than 23 million residents promising to turbo-charge sales of his company’s popular Epic Pass. It is almost inevitable that the new, yet unnamed partnership between KSL Capital Partners, which owns California’s Squaw Valley Alpine Meadows ski area, and Aspen Skiing, which owns four ski areas in Colorado’s Roaring Fork Valley, will be offering a season pass that will include Aspen Snowmass, Squaw Alpine, Steamboat, Winter Park, Quebec’s Mont Tremblant, Vermont’s Stratton, Ontario’s Blue Mountain and West Virginia’s Snowshoe ski areas.
Maybe not for 2017-18, but a pass rivaling the $869 Epic Pass for 2018-19 seems certain, according to sources close to the deal. In a resort industry that is swiftly abandoning a reliance on real estate sales, season pass revenue is the proven financial engine, as shown by Vail Resorts.
But the previously undisputed dominance of Vail Resorts is threatened with this upstart union of industry veterans. In two days time, Vail Resorts went from virtually invincible in the season pass game — with its newly acquired Whistler Blackcomb and Stowe ski areas opening up new geographic markets on both coasts to grow Epic Pass sales beyond last season’s 650,000 — to nearly matched in a pass battle that will define the rapidly consolidating resort industry. The rivalry between Aspen Skiing-KSL Capital Partners and Vail Resorts will sculpt the industry’s development for decades.
Vail Resorts’ Epic Pass offers unlimited skiing at more than 40,000 acres spread across 11 major resorts in British Columbia, California, Colorado, Utah and Vermont, not counting three urban resorts in the Midwest. A pass offered by Aspen Skiing-KSL Capital Partners would deliver skiing on more than 25,500 acres spread across 15 resorts in four states and Canada.
Aspen Snowmass said earlier this week it was retaining separate operations, while the Intrawest resorts would be folded into the new company. KSL Capital’s Squaw Valley Alpine Meadows resort in the Lake Tahoe region will remain under existing management but will be part of the new partnership with Aspen Skiing.
Eric Resnick, the chief executive of KSL Capital Partners, said Gregory “will definitely be staying on board,” but he declined to discuss whether Gregory or snowboarding superstar Shaun White would retain their stakes in Mammoth.
Resnick said that while the deals for Intrawest and Mammoth were not predicated on a season pass product, in time there will be “new compelling products for the consumer.”
“It’s not something we currently have planned and at this point each one of these resorts is part of a very attractive reciprocity program and we look forward to continuing those relationships,” he said.
The Intrawest and Mammoth deals deliver more than 1,000 acres of developable, highly valuable resort land to the new partnership. But the Aspen Skiing-KSL Capital partnership isn’t about real estate development, Resnick said.
“It’s really operations that drive the value and the business within ski resort companies. That’s one of the misperceptions out there: that you buy a resort company to muddle through operations and make your money on real estate. But that could not be be further from the truth,” he said. “We would love to see real estate developed in a responsible manner because it does add value and … vibrancy to the village. But developing that real estate is not our main driver.”
If the new alliance follows the Vail Resorts model, the company will solicit development from outside companies and let someone else handle the planning, development, building and sales. Intrawest excelled at that, calling it “placemaking,” but the result yielded monster debt loads that crippled the company in the economic decline. Vail Resorts, the largest resort operator in the world, has pulled itself away from real estate development. The new Aspen Skiing – KSL Capital group is taking a cue from Vail.
“We would certainly be happy to work with third parties,” Resnick said.
Resnick and KSL Capital Partners chairman Mike Shannon were once executives with Vail Resorts, back when it was known as Vail Associates. Resnick said his team has watched Vail and Katz evolve the industry with its technological innovation and its game-changing Epic Pass.
“They have elevated the business model and the level of competition within the ski industry. Really we have nothing but admiration and respect,” Resnick said. “I think there was certainly healthy competition before this transaction and there will be healthy competition after this transaction. And it’s that competition that has forced every mountain resort to offer the best possible value proposition for their customers. And I’m saying that as a customer of the ski business for a lot longer than we’ve been investors.”
While Vail Resorts has had 20 years to develop its network of operations, giving it the ability to swiftly amalgamate new acquisitions into its radio-frequency-identification and internet commerce systems and databases, the new Aspen Skiing – KSL Capital team is starting from scratch. With Mammoth, Intrawest, Aspen Skiing and Squaw Alpine, it’s likely there are four completely different systems in place for not just operations but technical programs like website lodging reservations, ticket sales and radio-frequency season pass scans.
“If you look at what customers are saying these days, one they want a seamless e-commerce and technology experience when it comes time to spending time with us,” said Aspen Skiing chief executive Mike Kaplan earlier this week after announcing the plan to buy Intrawest. “We think there’s an opportunity to collaborate with technology and we think there’s an opportunity to collaborate with the strength of our employee bases and on the marketing end. We will be looking at all these things. But it’s too early to see what form that actually takes.”
Mammoth Mountain was in the middle of a decimating, historic drought in 2014 when the area’s owner, Starwood Capital Group, doubled down, spending $38 million for Bear Mountain and Snow Summit. Those resorts, at 100 miles east of Los Angeles, draw close to 800,000 visits. Mammoth logs about 1 million to 1.5 million visits a year and has blossomed as not just a winter but summer destination.
Connecticut-based Starwood Capital paid $365 million in 2005 for Mammoth, with both Intrawest and Mammoth founder Dave McCoy selling their interests in the ski area. Starwood Capital has invested big in the ski area, with new technology, lifts and marketing programs. Mammoth Lakes, the cozy town with a large airport at the base of the ski area, has revived under Starwood’s investment.
The $365 million Starwood Capital deal left Intrawest, which since 1996 had owned a large part of the ski area and its base village, with a 15 percent stake in Mammoth Mountain. Aspen Skiing and KSL Capital Partners acquired that stake in its agreement to buy Intrawest, which included the resort operator’s Canadian Mountain Holidays heliskiing operation, the largest in the world.
Barry Sternlicht, the chairman and chief executive of Starwood Capital Group, said his company had grand plans for Mammoth, “but the Great Recession and then some less than favorable weather interfered with our strategic aspirations.”
“We know Aspen and KSL have the experience, commitment, and balance sheet to help make our vision a reality,” Sternlicht said in a statement.
